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Won't happen while RI is in play. After the RI then RR qualify for the additional gov loan. Im sure RR priced in enough cash to cover them a good year with other restructuring. Only if in a year, if cash issues persist will other options be on the table.
Just need more planes in the air. It will become increasing difficult for govs to lock the world down, as further months prove that we have more chance dying of the flu than covid.
Won't happen while RI is in play. After the RI then RR qualify for the additional gov loan. Im sure RR priced in enough cash to cover them a good year with other restructuring. Only if in a year, if clas issues permits will other options be on the table.
Just need more planes in the air. It will become increasing difficult for govs to lock the world down, as further months prove that we have more chance dying of the flu than covid.
the rights is not in jeopardy, unless the price falls below 32p. The RI is effectively an IPO, reselling the firm again for 2bn. So any new buyers will be taking their rights, because they're buying to specifically lock in 32p.
Besides the entire RI is fully underwritten, of PI dont buy, investment banks will.
Even if price goes to 80p, then 32p extra shares is still a great buy in price for an established firm, just stuck with some cash flow issues. Blimey the price was £6.81 on 2nd Jan 2020. Got to value here at these prices.
It's as funny as my £7k down on 125,000 lloyds shares. Happy to take a punt at these prices. Hold for 2022 and smile in the pub with divs paying the drinks all night. Sooner or later everything will turn good.
There's no other fun out there, while stuck in doors. Throw the train commuting costs at the market and watch the charts. Heehee.
same in today at 116 earlier before it dropped to 113. Although back to 116 again.
I think RR have been quite smart to attract new investors. 116p and taking the rights gives about 51p a share. Which in turn gives a 10% return on 5p dividend. Then income could well be more than 5p once the planes are flowing.
I fancied this because as long as planes fly RR get paid on flying miles. Doesn't matter if planes are half empty or carrying freight instead of passengers. Better than a bet on IAG right now.
People are seeing value at the current RR price, even if they can't use a calculator, haha. Maybe 120 tomorrow.
My heart goes out to existing investors. Although its priced for new investors now.
I'm in for the rights today giving me an average 51p a share. I don't care if IAG etc run half empty planes, as Rolls get paid engine miles in the sky. Even if carriers are loading up passenger planes with cargo thats a plus for RR doesnt matter.
So I view RR as a better play than IAG. Plus the gov hold a golden share. No way the gov will let this fail going into Brexit.
Sure its brutal for existing shareholders, but I see upside after rights (prob 5p div so 10%). Only big risk is the rights has to complete for the gov to provide their suggested funding.
Not much of a gamble for me, when wecan pick up £15k of shares at Jan 1st prices (£6.81) for £1k now taking the rights shares.
Rick
OK I'm in for laugh.
510 shares bought for £1.16 each
510 / 3 = 170
170 x 10 = 1700 rights for 32p each
Average buy price 51p
Maybe will drop more, just wanted to lock in 51p
Good luck
Rick
Interesting because the graph doesn't suggest that. The price hasn't adjusted down to 60p levels for year lows in adjusted charts.
I dont really rate the rights, at the speed IAG burn cash you really needed £10bn+ rights issue.
Time will tell. If I called it wrong I'll hold my hands up and accept it. Lets say Friday next week.
I am following the stock. I've invested a lot of time reviewing accounts and doing the calculations. I'm keen to buy in at the right price. Even it I consider the shates a big gamble, rathervtgan a solid hold.
I've note provided advice, simple suggested 3 opinions the sgares could go post 7th oct. Although I highy recommend investors review cash, debt and cash burn in the only real available data 30th June results.
I wish investors well I truly do, just be aware if the high level risk. I'll be watching on Wednesday 7th good luck.
hi Hampstead boy. Because the dilution officially takes effect on 7th Oct, and the new shares become "tradable" that day.
Remember you moving from 2 billion shares to 5 billion "tradable" shares instantly that day. I'm not entirely sure how the market will react to that. 1) will they mark the shares down to equal a 1.8bn market cap? 2) is that priced in already? So the the market cap rises, but the shares trade the same price. 3) a mixture if both.
I suspect at least option 3, which is not bright.
Personally i'd be very nervous if I owned IAG until post 7th Oct. Even if you get through that unscathed, you've got trading update on 30th oct. No matter how upbeat people feel about vaccines and 2021, the market will react to "current events", cash burn, current sales and shareholder equity. It seriously is a scary time. Even after the rights issue, share holder equity cant more greater than 3bn.
Noe compare that with say lloyds or natwest who's shares are trading less than "half" of shareholder equity. Plus they have huge capital reserves to weather the storm. Iag burned its reserve in less 6 months.
Even if fights have picked up, my question would be; what is the hangover cost from 1st July until now (end of lhalf yearc esults). I suspect its not nice and very expensive.
I'm interest in IAG when the price reflects what I think its worth. Around 50p. Please review half year accounts, to see how scary the position is.
Rick (I own 125,000 lloyds, 3,100 natwest) no airlines yet.
That RNS news still doesn't include the new 3bn RI shares. Should be just under 5 bn shares in issue. Lets see the prices when that hits next week.
IaG are still burning £200m a week cash too, excluded any hedging fuel losses they're incurring.
Price might be rising, but that's not enough to fool me. 30th Oct trading update will be the real kicker.
The more I dig into this share, the more I dont like it. £1.2bn loss in half year, "just hedging fuel". Market cap 1.8bn totally wrong until these new shares hit next week. £6bn loss for first 6 months with only £785m shareholder equity remaining (pre rights issue). If IAG have another bad fuel hedging loss, thats going to wipe out any light pick up in seats. Not confident yet getting in, need more positive news.
I've said before,I think investors need to be realistic.
There're currently 1,992,032,664 shares in issue.
On 7th Oct another 2,979,443,376 new shares become tradable.
Meaning a total of 4,971,476,040 shares are in issue.
I truly feel the pain of existing holders, although sadly the market will be flooded with huge sells. Because if existing holders have already just invested, where are you going to find new buyers?
The current price is almost at the rights price, before we get to wednesday. That was supposed to be your special price to soak up your pain. Why are existing holders going to throw even more cash at a falling knife?
Now look at daily cash burn, desperate ticket sales just to fill 'some' seats. Next year seats selling for peanuts. Even if covid ended tomorrow there is a huge job bouncing back, plus holiday season is over.
I'm sorry so say the price is looking at 80p next week, falling to 60, the 50 by end of Oct-20. Then you have the trading update which is likely to be desperate. Then 35p
I might dip my toe in at 50p as a pure gamble trade for 5k shares, but even then I think there will further slide, into 30's. Writing is on the wall. If it doesn't fall, I won't touch it, more value in banks at this level of risk.
Good luck Rick.
I don't believe the BoE ever imagined bank share prices would fall below equity (book) value, or by such a large margin. This pain is truly on their hands, banning buy backs at these prices is a massive missed opportunity too.
So pressure will be on the BoE regulator to repair the damage they've inflicted on private business. I expect the regulator to release the chain around banks necks pretty soon. Before year end now.
I also hope that lloyds has taken some derivative position to allow them to lock in a buyback price at say 25p. Once the regulator sets us free. Would be madness not too, if they can.
Holding my decent stack, for the goodtimes.
it's interesting to read opinion. I currently hold a lot of shares in banks, although I might take a dip into IAG after the rights issue offically hits the market.
At the moment those 2.5x shares are sold (rights closed), but not yet tradable or officially listed. I foresee a lot of selling when the market cap adjusts to those new shares. I hear 7th October 2020, although not seen the date officially. When RNS news for IAG declares new voting rights for just under 5bn total shares, I will watch the fallout. I actually foresee a price between 35 - 50p once that happens. I dont think market has really priced in the impact rights yet.
Add to that the covid "is it getting better or worse?" If worse, it will impact prices. Thats the harsh reality of it.
I wish shareholders well, I just feel there's more pain to come.
Rick
I think banks are now very much understood since the 2008 crash. Im sure Lloyds holds enough shareholder equity for the price to be 50 - 60p. In other words if they shut up shop tomorrow sold everything. We would get back 50- 60p (excluding unused provisions). Even RBS is sitting on like 264p a share, its crazy.
I'm on loss on these Lloyds shares with my 120,000 holding, but I'm in for the div when it comes back. There's huge pressure now on the regulator to release the chains, and allow private business to manage itself. Even if divs are banned, buybacks should be allowed at these prices. Or the Gov should underwrite a demanded buyback. I.e. they pay for the price difference later if Lloyds wants to buy 20bn shares at 25p now. Its not fair play otherwise. Anyway wants stopping lloyds "investing" in its own shares by other instruments? That works like a buyback but is some kind of derivative.
you think when 2.5x more shares 'officially' hit the market, there will be no impact? Brave man indeed.
The market is already trashing the price, at 2.5x less shares actually in issue. Now the rights is closed, the game really begins. Peoole have hoodwinked badly. I noticed all the board sold enough part rights to pick up any new shares for effectively free. No much of a sign of confidence from them.
Well jonny, The new shares are not listed. Otherwise there would be an RNS post stating voting rights of around 5bn shares. I did the calcs n a spreadsheet, but I'm not opening up my pc to prove my point. Either the market has priced in the potential new shares or it hasn't. I personally would not be comfortable buying in, until those new shares hit the market, and I see where the price settles. However I'd be keen to understand what I don't understand, please enlighten me.
correct the current share price is around 93p and you bought the rights at 88p. Unfortunately the current market cap is still based on the original shares in issue not the original shares plus the rights total number of shares.
This means the market hasn't actually diluted your holding yet. I understand this will be around 7th Oct 2020. I assume your jew shates are still pending, not in your account to sell.
This suggests to me the current price will be diluted by 2.5x meaning the market will demand 37p when these new ahares are added to the market. Or the market has already priced that in (I personally doubt that though). The market is brutal and will demand 37p. Then you have potential down side on that as millions of new shares are dumped.
To prove the current market cap check RNS posts for shares in issue (voting rights posts). The July and Sept posts state 1.7bn shares. The 2.5x dilution has not happened yet from the position of market.
Good luck. I might buy after the dilution hits the market, watching with interest. Always do your due diligence when you have your money on the table.
Why do you think the prospects are awful? Less than 6 months we're back in div paying terrority. Back has huge capital, looks like the country is leaving fear and anxiety behind now. PPI is over, might even get a plus from the huge provision. The bank is huge, the app is liked and used more during the lockdown. If you look at the annual chart, you've not missed the boat at all, just missed the bottom. Still getting 57p of asset for 30p ish.